Markets Right Now: Stocks sink as hopes for rate cuts fade

Photo: Federal Reserve
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NEW YORK (AP) -- Stocks fell and bond yields rose after the Federal Reserve lowered its key interest rate for the first time in a decade but left investors feeling uncertain about the likelihood of further cuts.

The quarter-point cut announced Wednesday was widely expected, so investors focused on Chairman Jerome Powell's remarks during a news conference for hints about the Fed's future plans.

Powell said there could be more cuts, but the central bank was not intending to embark on a long cycle of lowering rates.

Tech stocks fell the most. Microsoft lost 2.9%.

The S&P 500 fell 32 points, or 1.1%, to 2,980.

The Dow Jones Industrial Average lost 333 points, or 1.2%, to 26,864. It was down 478 earlier.

The Nasdaq fell 98 points, or 1.2%, to 8,175.

2:10 p.m.

Financial markets are having a muted reaction to the Federal Reserve's decision to cut interest rates, which was widely expected.

Stocks wobbled slightly in the moments after the Fed's announcement at 2 p.m. Eastern time, but within minutes they were trading more or less where they were before the statement was released.

The S&P 500 was down less than 0.1%.

Prices of short-term U.S. government bonds fell after the announcement, sending yields higher.

Some on Wall Street had believed the Fed might act more aggressively in cutting rates by half a percentage point rather than the quarter-point cut it wound up making. The smaller cut prompted investors to lighten up on bonds.

The yield on the 2-year Treasury climbed to 1.82% from 1.80% before the cut.